With such good news, the head of government insisted on announcing it personally and live on television: The US chip manufacturer Intel will build a new factory in Israel for 25 billion dollars, announced Prime Minister Benjamin Netanyahu at the beginning of the weekly cabinet meeting. “This is the largest investment ever made by an international company in Israel.” He praised this as a success of his economic policy – and he really needs such a success. Because recently the Israeli economy and above all the high-tech sector had mainly produced negative headlines due to the turbulence surrounding the upheavals in the judicial system planned by the right-wing government.
But now Netanyahu has been able to boast positive news: The new factory is scheduled to open in 2027 in Kiryat Gat south of Tel Aviv, where Intel already has a production site. Thousands of jobs are to be created and secured at least until 2035, the Israeli Ministry of Finance added. According to this, a subsidy of 12.8 percent of the investments should come from the state. In addition, a tax rate of 7.5 percent was agreed for Intel, which is above the current rate of five percent.
Intel’s plans in Israel run parallel to the company’s investment drive in Europe. It was only announced on Friday that a processor factory is to be built in Wroclaw, Poland, for 4.6 billion dollars. And in Magdeburg, Intel is investing more than 30 billion euros, including state aid; the federal government wants to support the settlement of the US chip manufacturer with almost ten billion euros.
Intel is the largest private employer in Israel
The investment sum of 25 billion dollars in Israel now mentioned by Netanyahu actually comes close to the plans in Europe. However, Intel itself did not give any specific figures in a statement on the project in Israel. It only said that Israel as a location played a “decisive role” in the company’s success and that the “continued support of the Israeli government” was appreciated. The Israeli media has calculated that ten of the $25 billion mentioned may relate to an investment announced in 2018.
Intel has been active in Israel since the mid-1970s and has always been at the forefront of the much-heralded success of the so-called startup nation. Former President Shimon Peres, who died in 2016, said that Intel made Israel a country of “milk, honey and chips”.
Around 12,000 of the approximately 130,000 Intel employees worldwide work in the Israeli locations. In addition to the factory in Kiryat Gat, this also includes development centers in Jerusalem, Haifa and Petach Tikva. Intel is thus the largest private employer in the country and also points out that it is responsible for more than 42,000 jobs in the supplier industry. Just last week, Intel Israel announced a record year for exports. They reached a value of $8.7 billion in 2022/23, equivalent to 5.5 percent of all Israeli high-tech exports and a 1.75 percent share of Israel’s gross domestic product.
The company has also repeatedly invested large sums in the takeover of Israeli startups. Most recently, Intel acquired Israeli semiconductor specialist Tower Semiconductor for $5.4 billion in 2022. In 2017, Mobileye paid $15.3 billion for autonomous driving.
“In stark contrast to all the false reports about us”
Prime Minister Netanyahu is now trying to make political capital out of the investment announcement for the new factory. Intel’s plans are “a great expression of confidence in the Israeli economy,” he said – and this “stands in stark contrast to all the false reports about us.” He is alluding to open letters and statements from business leaders in recent months who had warned of a decline in the economy, including capital flight and a brain drain, because of the policies of his right-wing government.
Tzachi Weisfeld, the vice president of Intel Israel, was among these warnings at the beginning of March. In the Business Journal Calcalist “As a private citizen” he had called on the government to “stop the madness” with a view to judicial reform. At the end of March, Netanyahu put the plans on hold, at least for the time being.